Chairman Businessmen Group (BMG), Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI), Muhammad Rehan Hanif have urged the State Bank of Pakistan (SBP) to reduce policy rate by at least 100 basis points to being the interest rate down to 10 percent as inflation had considerably moderated compared to the high levels witnessed in 2024, which had created adequate space for monetary easing.
In a joint statement, Chairman BMG and President KCCI noted that the SBP’s policy rate had remained unchanged at 11 percent for the fourth consecutive time, including the most recent decision announced on 27th October 2025 but maintaining such a high rate for an extended period was placing a significant burden on the economy, hence, it is high time to bring it down by at least 1 percent.
They further mentioned that Pakistan’s external sector had shown signs of improvement, supported by program inflows and a gradual strengthening of foreign exchange reserves, which had collectively reduced pressure on the macroeconomic framework. In light of these developments, they emphasised that holding the policy rate at historically elevated levels was adversely affecting industries, SMEs, exporters and investors, who were facing exceptionally high financing costs that were stifling investment and hampering the revival of economic activity and employment.
They remarked that a reduction of at least 100 basis points would likely provide the necessary stimulus to revive investment sentiment. They stated that lower borrowing costs would ease financial strain on businesses, improve their working capital positions, and encourage them to undertake expansion and hiring plans that high interest rates had repeatedly delayed. They also believed that a timely policy rate reduction would help redirect bank lending toward productive sectors rather than concentrating disproportionately in government securities, thereby supporting real economic growth.
While acknowledging that the SBP had a responsibility to remain vigilant about inflationary pressures, they stressed that the prevailing economic indicators suggested that a carefully calibrated rate cut, accompanied by clear communication and appropriate safeguards, would not compromise price stability. Instead, it would meaningfully contribute to rebuilding business confidence and accelerating the recovery.
They further underscored that Pakistan’s policy rate of 11 per cent was among the highest in the region. In contrast, several peer and competitor economies were operating with substantially lower benchmark rates that directly supported their industrial and export competitiveness. They noted that the Reserve Bank of India (RBI) continued to maintain its repo rate at around 5.25 percent, the Central Bank of Sri Lanka (CBSL) had brought its Overnight Policy Rate down to approximately 7.75 percent, Vietnam’s refinancing rate stood at 4.5 percent, Nepal’s policy rate was also around 4.5 percent, and Bangladesh’s repo rate was positioned at 10 percent. They observed that this wide interest-rate gap had placed Pakistani producers and exporters at a clear cost disadvantage, further strengthening the case for an urgent and meaningful reduction in the domestic policy rate.
They said the business community had been eagerly awaiting a positive signal from the central bank, and that a 100-basis-point reduction at the upcoming MPC meeting on December 15 would demonstrate responsiveness to economic realities and provide essential relief to the productive sectors of the economy.
